💼 Changes at the top
New chief executives for FTSE 100 companies + tech results + Shrinking
Hello and welcome to the latest edition of Off to Lunch….
There are changes at the top of some of Britain’s biggest companies today:
Unilever, the owner of Persil, Lynx, Domestos, Dove soap, Magnum ice cream and many other consumer brands, has announced that Hein Schumacher will become chief executive in July. He will replace Alan Jope, whose departure was announced last September following a shareholder backlash over a failed £50 billion bid for Glaxosmithkline’s consumer business - now known as Haleon. Schumacher, 51, is the boss of the Dutch dairy and nutrition group Royal FrieslandCampina. Before joining FrieslandCampina in 2014, Schumacher spent a decade at Heinz and started his career as a graduate trainee at Unilever. He has actually been on the board of Unilever as a non-executive director since October, just after the departure of Scotland-born Jope was revealed. That shift from non-executive director to chief executive is not unusual. Boards sometimes appoint potential chief executives as non-executive directors first so they can study them up-close. Sometimes non-executives also use their position on the board to put themselves forward as chief executive. Here it looks like Nelson Peltz, the activist investor (and father-in-law to Brooklyn Beckham), has played a key role. It emerged that Peltz had bought a stake in Unilever and would be joining the board on May 31 last year. Just three weeks later, Schumacher’s appointment to the board as a non-executive director was announced. Also, Pletz and Schumacher know each other - Peltz was an investor in Heinz at the same time Schumacher worked there. And we know that Peltz was speaking to potential CEO candidates himself because Reuters reported it in October here. It is not hard to join the dots on this story…In a statement on Monday, Peltz said: “Like all of my fellow Unilever directors, I strongly support Hein as our new CEO and look forward to working closely with him to drive significant sustainable stakeholder value. I first met Hein when I served as a director at the H.J. Heinz Company from 2006 to 2013 and was impressed by his leadership skills and business acumen.”
Meanwhile, Sir Nigel Wilson has told the board of Legal & General, the insurance and fund management group, that he wants to retire as a full-time executive. Sir Nigel, 66, was appointed as chief executive of L&G in 2012 and before that was the finance director for three years. L&G says that Sir Nigel will stay until a new chief executive is appointed and starts - a process that the company thinks “will take around a year”. Sir Nigel was born in County Durham and has been a prominent supporter of levelling up. L&G has invested in regeneration projects across the UK, has supported plans to build more rental homes, and Sir Nigel serves on the government’s levelling-up advisory council. Once Sir Nigel stands down from L&G he is likely to get a lot of offers for part-time advisory and non-executive roles. Liz Truss wanted Sir Nigel to be her minister for investment. "Legal & General has been a big part of my life and my decision to retire from the group has been taken with mixed emotions,” Sir Nigel said, who has five daughters and three grandchildren.
Leaving their role in a less triumphant note is Itai Pazner, chief executive of 888 Holdings, the gambling group which owns William Hill in Europe. Pazner is leaving 888 with immediate effect. The company announced his departure in a statement to the stock market at 7am, the standard time for announcements. At 7.05am a second announcement came through on the feed - 888 has suspended some VIP customer accounts in the Middle East after an internal compliance review found that “certain best practices have not been followed in regard to KYC (Know Your Client) and AML (Anti-Money Laundering) processes”. A full internal investigation has now been launched. Lord Jonathan Mendelsohn, the Labour peer, is the chairman of 888 and has become executive chair on an interim basis while the company looks for a new boss. Although 888 did not say if there was any connection between the two statements, Lord Mendelsohn said of the internal investigation: “We will be uncompromising in our approach to compliance as we build a strong and sustainable business."
As you might expect given the differing announcements, shares in Unilever, L&G and 888 have gone in different directions today. Unilever shares are up 0.6 per cent (valuing the company at £102 billion), Legal & General is down 2.8 per cent (valuing it at £15 billion) and 888 is down 27 per cent (valuing it at just £335 million).
According to research by AJ Bell, the announcements from Unilever and L&G mean that 10 FTSE 100 companies have now changed their chief executive or announced they will be changing their chief executive so far in 2023. That’s one in ten bosses gone and it’s not even the end of January. There are different reasons for the changes - some are due to long-serving and well-respected chief executives standing down, others are clearly due to pressure from investors. So it’s too early to call this a trend. But it’s definitely something to track as 2023 goes on. Are investors, frustrated by volatile markets and the uncertain economic environment, being more aggressive in pushing for change at the top?
Other stories that matter…
It’s a big week for corporate and economic news. Apple, Amazon, Alphabet and Meta are among the companies posting results across the Atlantic, while in the UK we get GSK, Vodafone, Shell, BT and more. The Federal Reserve and the Bank of England are also both expected to increase interest rates again this week. The Bank of England is expected to increase interest rates from 3.5 per cent to 4 per cent, the highest since 2008 (Proactive Investors)
I enjoyed this look at Reed Hastings’ management style at Netflix and how he transformed the company from a collapsing DVD rental business into a Hollywood studio. There is great colour in the piece like his failed attempt to sell the business to Blockbuster and his obsession with honesty and transparency inside the company, including everyone’s salary being published internally and managers being encouraged to ruthlessly cut under-performing staff with generous severance packages (Sunday Times)
Tax expert Dan Neidle, who uncovered much of the details about Nadhim Zahawi’s tax issues, has published a blog that seeks to challenge some myths about how the story emerged. This includes how he worked with the mainstream media to break it, rather than the mainstream media ignoring it, and that this was no David v Goliath battle but the result of plenty of time, financial resources and experience (Tax Policy)
Interesting piece by Tom McTague, Unherd’s political editor and previously of The Atlantic and Politico (where he wrote on politics and life across the UK) about why Britain should not be concerned about decline - prime ministers really change anything fundamental - but boring continuity. Younger generations should aim to be more radical, he writes (Unherd)
The Financial Times has done a big feature looking at the tensions around university spin-outs at Oxford and other institutions. We have covered spin-outs in Off to Lunch and our Business Studies podcast, looking at the big potential they have but also the challenges they involve. One of the inherent challenges is the tension between the entrepreneur - often a student or academic - and the university about the level of equity each should have. There is also criticism about how slow and cumbersome it can be to turn an idea or university research into a business, and that ultimately this process drags the potential business down. The FT piece flags a legal battle between a former PhD student and the University of Oxford over whether he should pay royalties to the institution for a business he developed while there (Financial Times)
Renault and Nissan have agreed a deal to restructure their alliance and invest in electric cars together (FT)
The Times sports writer Martin Samuel has written about why Ryan Reynolds and Rob McElhenney’s ownership of Wrexham should be celebrated and is benefitting the Welsh town (The Times)
The psychologist and business-focused author Adam Grant has flagged some books that are on the way in 2023 that could provoke new ideas and debates, including one on the importance of wonder and awe, and an autobiography from Ginni Rometty, the former boss of IBM (Granted)
The tidying and decluttering guru Marie Kondo says she has “kind of given up” on tidying after the birth of her third child. This made me laugh… (The Telegraph)
A new football celebration pioneered by Manchester United’s Marcus Rashford that involves a player pointing at their head after a goal is scored is spreading rapidly. It’s all about finding your focus and cutting out the noise apparently (The Athletic)
Finally, check out Off to Lunch’s Sunday press review for a round-up of the interesting stories in the weekend newspapers. Off to Lunch members were sent this yesterday. You can click here to read this week’s edition and get next Sunday’s sent directly to your inbox.
And finally…
I watched the first two episodes Shrinking on Apple TV+ over the weekend and it is well worth your time. There are two reasons I was interested in the show - Harrison Ford, who plays one of the main characters, and Brett Goldstein, who is one of the actors and writers behind Ted Lasso and is a writer and producer on this.
Shrinking is a comedy about how therapist Jimmy, played by Jason Segel, is struggling with grief after the death of his wife. At the heart of the show is his relationship with his daughter Alice, who is also struggling following the death of her mother. Without spoiling the show, Harrison Ford plays another therapist who is a colleague of Jimmy and, it turns out, is trying to help both him and his daughter. If this all sounds heavy-going - it isn’t, each episode rattles along at a great pace, although there are some poignant moments that will be familiar to anyone who has lost someone close to them. There is a noticeable similarity in the tone and feel of the show to Ted Lasso, particularly the focus on men’s mental health. If you like Ted Lasso, or Harrison Ford, you will like this show… New episodes are being released every Friday.
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Best
Graham